Sweeping U.S. Patent Reform Proposed

Thursday, Congressman Lamar Smith introduced the Patent Reform Act of 2005 to the floor of the House. The bill modifies how patent owners are identified, how patents are awarded, disclosed, disputed and what damages patent holders are entitled to from infringement.

If the legislation is signed into law it would be the most sweeping reform made to the U.S. Patent and Trademark Office since the 1952 Patent Act.

Smith says that the proposed changes would eliminate "legal gamesmanship" that disrupts the operations of high-tech companies and that the changes will improve the overall quality of patents. Smith also believes that an upsurge in innovation will come as a result; although, critics of the bill say that it will have a negative impact on technology start-ups and favor big business.

"This will help individuals and companies obtain seed money for research, commercialize their inventions, grow their businesses, create new jobs, and offer the American public a dazzling array of products and services that make our country the envy of the world," Smith commented.

"All businesses, small and large, will benefit. All industries directly or indirectly affected by patents, including finance, automotive manufacturing, high-tech, and pharmaceuticals, will profit. The bill is a good first-cut of what we envisioned when this process commenced. No doubt, it will undergo changes as we proceed to markup," concluded Smith.

Smith is Chairman of the Subcommittee on Courts, the Internet, and Intellectual Property in the 109th Congress.

The opposition to current system alleges that there is a problem with the volume of IP rights being granted to the technology sector: Obtaining patents has become a cottage industry. Critics claim that companies will frequently lay "patent traps" to profit from their IP portfolios through litigation at the expense of innovation, small businesses and world economy.

Many consider the proposition of there being "too many" patents to be as harmful to society as "too few" based upon the economic cost of litigation alone. Advocates of patent reform say that the incentive to invent and earn a patent must outweigh the incentive to obtain patents to evade open competition.

Microsoft is among those advocating for patent reform.

But reformers such as Smith also face opposition by many who believe that the sickness may be just as bad as the cure proposed by Congress, stripping away elements that protect the odds of start-ups.

"In my opinion, there would be an adverse impact from the proposal that requires that all patent applications be published 18 months of filing," Robert E. Krebs, Co-Chair Intellectual Property & Trade Regulation Group at Thelen Reid & Priest, told BetaNews in reference to the Patent Reform Act of 2005.

"Under current law, savvy start-up companies can keep their technology secret in the Patent Office for several years. These few years of secrecy -- during which the companies can keep their technology away from their competitors while, at the same time, pursing patent protection and readying their product for market -- can be crucial for business success. Perhaps the current proposal will have the same fate as a similar proposal which Congress considered -- and defeated -- a few years ago," said Krebs.

If enacted, the Patent Reform Act of 2005 would:

- Provide that the right to a patent will be awarded to the first inventor to file for a patent who provides an adequate disclosure for a claimed invention;

- Simplify the process by which an applicant takes an oath governing the particulars of an invention and the identity of the rightful inventor;

- Delete the "best mode" requirement from §112 of the Patent Act, which lists certain "specifications" that an inventor must set forth in an application;

- Codify the law related to inequitable conduct in connection with patent proceedings before the PTO;

- Clarify the rights of an inventor to damages for patent infringement;

- Authorize courts with jurisdiction over patent cases to grant injunctions in accordance with the principles of equity to prevent the violation of patent rights;

- Authorize the PTO to limit by regulation the circumstances in which patent applicants may file a continuation and still be entitled to priority date of the parent application;

- Expand the 18 month publication feature to all applications;

- Create a new post−grant opposition system;

- Allow third-party submission of prior art within six months after the date of publication of the patent application.

The bullet points were provided by the office of Congressman Lamar Smith.